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Ford Motor Companys Globalization Strategy
Introduction
A global approach is a firms plan for expanding into the worldwide market. The objective of designing an international campaign is to boost worldwide sales. The international strategy encompasses standards as well as foreign and multinational concepts (CuervoCazurra et al., 2020). Therefore, adopting a worldwide approach can be advantageous for Ford Motors, Inc. in a variety of ways, such as growing sales in new countries and trademark recognition on a global scale.
Globalization Strategy in Bangladesh and Rwanda
This paper has identified and assessed Bangladesh and Rwanda as the two potential countries for Ford to globalize its operations. The rationale for the above selection is that the two nations are among the best five countries with fast-growing economies. Bangladesh has an average growth of 6.9% (2021-2025), whereas Rwanda has 6.7% (2021-2025), ranking second and fourth, respectively (Cao & Shi, 2021). Therefore, under this section, an analysis is undertaken based on various factors that will be discussed.
Bangladesh
Size and Characteristics of the Market
The automobile sector in Bangladesh ranks third in the South Asian continent. Islam (2022) reports that there were only 303,215 licensed motorized cars in Bangladesh in 2003. Nonetheless, there were 4,729,393 authorized trucks in Bangladesh as of May 2021; 544,616 are personal cars (Islam, 2022). Almost 68% of the customer vehicle marketplace is controlled by sedans, making up most of the automotive industry. SUVs and microbuses make up the residual 12.40% and 19.27%, respectively (Islam, 2022). Due to the rise in spending power, more individuals are acquiring vehicles.
Number and Size of Global, Regional, and Local Competitors
Toyota, Honda, Mitsubishi, BMW, Baic Motors, Morris Garages, Hero MotoCorp, Nissan, Foton Motors, and Suzuki are some of the global automakers in the Bangladeshi economy. According to Byron and Chakma (2020), Toyota holds 80% of the industry share, and since the 1990s, the Japanese automaker Toyota has dominated the sector for individual consumer vehicles. Other international, local, and regional enterprises functioning within the jurisdiction hold the remaining marketplace share percentage. Local players include Pragati Industries Limited (PIL), RUNNER Automobiles Ltd, Walton Hi-Tech Industries Ltd, and Aftab Automobiles Ltd. The state-owned PIL commands the home market with a 7% consumer base (Al-Haq, 2021). Regional players include the Malaysian Agate Group, and Hyundai are the main rivals in Bangladesh.
Percentage of Domestic Production Imported
Since Bangladeshs indigenous production capacity is still very limited or almost nonexistent, nearly all local consumption for automobiles is satisfied by imports. The domestic automobile market is characterized by foreign-reconditioned cars. Despite the significant growth in the importation of new automobiles, the overall import valuation of remanufactured motors in the financial year (FY) 2019 is still 27 times that of more recent imports. During FY16, the ratio was 7.5 times more skewed in support of refurbished automobiles.
Percentage of Domestic Production Exported
The proportion of domestic production exported by Bangladesh automakers is enumerated below. Bangladesh Auto Industries Ltd (BAIL), a local automaker, has expressed interest in producing electric automobiles in the nation with an initial expenditure of USD 200 million, of which 80% will be obtained locally (Keeton-Olsen, 2017). By manufacturing high-end electric vehicles, Bangladesh may increase its export portfolio by taking advantage of duty-free access to the Chinese and Indian markets.
Tax Level for Domestic and Foreign Companies
Bangladesh mandates a particular tax compliance rate for its local companies every year. Most taxes are enforced in the form of supplemental duty (SD) assessed at rates ranging between 20% to as high as 500% for cars of more than 4000 cc engine capacity (Al-Haq, 2021). An analysis of the existing tariff and tax schemes applied to imported companies reveals that the obligation rates vary substantially in three distinct ways. First, it relies on whether automobiles are imported in entirely knocked down and fully constructed forms (CUF). Second, according to the motor abilities of cars, and third, dependent on the fuel origins of vehicles.
Local Laws and Regulations Related to Industry
In Bangladesh, automobiles imported cannot be older than four years. JAAI (Japan Automobile Appraisal Institute) certification should be required for Japanese imports. In addition, automobiles transported into Bangladesh are subject to levies on secondhand vehicles. According to the ordinance of the administration of Bangladesh, the importation of refurbished automobiles, jeeps, microbuses, minibusses, and other older vehicles, as well as tractors, is permitted (Al-Haq, 2021). Only ambassadors and legislature representatives in Bangladesh can import one new or used vehicle duty-free.
Rwanda
Size and Characteristics of the Market
In recent years, the Rwandan car market has exhibited an erratic tendency, with licenses varying between 500 and 780 units. Rwandas market size is estimated to be 15% of Africas automobile industry (Partner, 2022). After the significant loss observed in 2016, when sales dropped to 522, the market soon recovered, with 2017 purchases surpassing a record high of 780 units. Partner (2022) reports that car possession has nearly quadrupled in Rwanda since 2011. The market is marked by intense rivalry between used cars shipped from the United States, Europe, and Japan.
Number and Size of Global, Regional, and Local Competitors
Three worldwide automakers operate in Rwanda; Toyota, Volkswagen, and Mitsubishi. Brand-wise, up to August 2022, the market base was distributed as follows by the three firms; Toyota (+20.6%) acquired 6.8% marketplace share, accompanied by Volkswagen, which on the contrary side declined by 44.8%, and lost 6.2% consumer base. Mitsubishi (+21.1%) ranked third after obtaining a 0.9% industry share (Carlo, 2022). The country is yet to register its local automobile firm to produce vehicles locally. Consequently, the East African region lacks a significant competitor dealing in car manufacturing.
Percentage of Domestic Production Exported and Imported
Since Rwanda imports parts and components for its car production, the proportion of the local output imported by crucial players is high. For instance, in 2020, Rwanda imported $18.9M worth of Automobiles, ranking as the 174th highest automobile importer in the world (Partner, 2022). On the other hand, since the country has no local automaker for its automobiles, there is no specific percentage regarding the level of domestic manufacturing exported to other countries.
Tax Level for Domestic and Foreign Companies
The Rwandan government has no strict regulations regarding the operations of industries within its borders. The Commercial income tax percentage in Rwanda is a duty received from businesses. Its size is ordinarily determined by the net earnings earned by a company during one operating year, and it stands at 30%. Through a continuous establishment, foreign companies are regulated on income generated in Rwanda. Therefore, they are taxed similarly to local firms to encourage investments.
Local Laws and Regulations Related to Industry
On Rwandan public highways, all automobiles must be examined and tested for conformity with pollution standards. In addition, to any other roadworthiness standards, no motorized vehicle or motorcycle may be certified initially without proof of conformance with carbon emission limitations. For foreign enterprises, automobiles must be supplemented by a confirmation of adherence to exhaust discharge restrictions given by an entity in the supplying nation that has been officially authorized.
Major Potential Competitors
Bangladesh
Toyota Motors
Toyota Motors Company is a Japanese automobile firm that manufactures car parts and components. Since the 1990s, the Japanese carmaker Toyota has commanded Bangladeshs automotive sector for personal consumer automobiles, with 80% of the market share, the global sector (10.5%), and the Asian sector (70%) (Buss, 2022). Toyota is actively utilizing its significant strategic benefit in green marketing. Toyotas organizational approach is acquisitions, as many enterprises in the automobile sector are undergoing considerable revenue declines, which may prompt them to liquidate their operations. Toyota employs two pricing techniques, market-oriented selling, and value-based pricing, which are adaptable to market changes and the competitive landscape Its wide capital base offers the company a competitive edge as it can acquire raw materials and buy struggling firms. Toyota implements quality-related actions and procedures by providing dependable and prompt products at reasonable prices and aiding dealers in advancing supplied products.
Mitsubishi Motors
Consequently, this corporation is headquartered in Japan and has global operations in Bangladesh. It commands a global customer base of 7.8%, 20% Asian market share, and 17% in Bangladesh (Al-Haq, 2021; Bharadwaj, 2018). Mitsubishi employs a user-benefit-oriented marketing approach to represent itself as a reputable and client-pleasant conglomerate. Its competitive advantages are incredibly advanced, competent Group, knowledge collecting and process implementation skills, and vast third-party connections. The company has relatively low prices on its goods and offerings. By rapidly recognizing and assessing consumer feedback, the quality-related actions, procedures, and associated quality tasks of Mitsubishi Motors are designed to enhance product quality.
Pragati Industries Limited (PIL)
This firm is state-owned and operates locally within Bangladesh as it does not have adequate resources to compete globally. Therefore, it has no global market share as its domestic production is for local consumption. However, in Bangladesh, the firm commands 7% of the market share (Al-Haq, 2021). The firm uses a differentiation strategy by diversifying its product line along different segments. Its competitive advantages include low pricing and a broader financial base. Since the government runs it, it sells its goods at relatively low prices to remain competitive in Bangladesh. Its quality-related activities, processes, and relative effectiveness revolve around the production of luxury products.
Rwanda
Toyota Motors
Toyota has a market share of 6.9% in the Rwandan economy, ranking the best among its global competitors operating in Rwanda. Since the 1990s, the Japanese carmaker Toyota has commanded a global share of (10.5%), and Asian sector (70%) (Buss, 2022). Toyota is actively utilizing its significant strategic benefit in green marketing. Toyotas organizational approach is acquisitions, as many enterprises in the automobile sector are undergoing considerable revenue declines, which may prompt them to liquidate their operations. Toyota employs two pricing techniques, market-oriented selling, and value-based pricing, which are adaptable to market changes and the competitive landscape Its wide capital base offers the company a competitive edge as it can acquire raw materials and buy struggling firms. Toyota implements quality-related actions and procedures by providing dependable and prompt products at reasonable prices and aiding dealers in advancing supplied products.
Volkswagen (VW)
Volkswagen Company is a German-based automaker with global activities in Rwanda. The company has an international market share of 11%, an EU customer base of 25% (Volkswagen Group, 2022), and 6.2% in Rwanda (Carlo, 2022). Volkswagen Groups effectiveness is built on its tactic, encompassing sustainability, research, and development. In addition, a key component of VWs comparative strength in the automotive market is its vast and extensive brand range which comprises industry-leading companies like Audi and Ducati (Volkswagen Group, 2022). The company sells its products at different prices; for example, the cost of the VW Golf is $13,470 (Volkswagen Group, 2022). The company determines region-specific buyer needs and maintains quality by utilizing market research and consumer surveys.
Mitsubishi Motors
Mitsubishis market share of 0.9% in Rwanda ranks third behind Toyota and Volkswagen. For the other information about elements not discussed, kindly read Mitsubishi in Bangladesh as they require the exact requirements. Consequently, this corporation is headquartered in Japan and has global operations in Bangladesh. It commands a global customer base of 7.8%, 20% Asian market share, and 17% in Bangladesh (Al-Haq, 2021; Bharadwaj, 2018). Mitsubishi employs a user-benefit-oriented marketing approach to represent itself as a reputable and client-pleasant conglomerate. Its competitive advantages are incredibly advanced, competent Group, knowledge collecting and process implementation skills, and vast third-party connections. The company has relatively low prices on its goods and offerings. By rapidly recognizing and assessing consumer feedback, the quality-related actions, procedures, and associated quality tasks of Mitsubishi Motors are designed to enhance product quality.
Conclusion
In conclusion, Bangladesh and Rwanda provide a prospective global market for Ford Motors Company. Both nations are positioned among the best five growing economies in the world. Their various appropriate regulations and policies, tax levels for foreign enterprises, and the automobile sectors size, among others, make them suitable for long-term investment by Ford. Therefore, Ford Motors should consider expanding its activities in Rwanda and Bangladesh through mergers with local companies to increase its worldwide consumer base.
References
Al-haq, R. (2021). A brief look at the auto industry in Bangladesh. The Daily Star. Web.
Bharadwaj, A. (2018). Evolution of the global automobile industry. In Environmental Regulations and Innovation in Advanced Automobile Technologies (pp. 1-9). Springer.
Buss, D. (2022). Toyota tries to turn 2021 share gains into permanent market edge. Forbes. Web.
Byron, K. R., & Chakma, J. (2020). Cars made in Bangladesh on the way. The Daily Star. Web.
Cao, Z., & Shi, X. (2021). A systematic literature review of entrepreneurial ecosystems in advanced and emerging economies. Small Business Economics, 57(1), 75-110.
Carlo. (2022). Rwanda cars sales Data & facts in 2022. Focus2Move. Web.
CuervoCazurra, Á., Doz, Y., & Gaur, A. (2020). Skepticism of globalization and global strategy: Increasing regulations and countervailing strategies. Global Strategy Journal, 10(1), 3-31.
Islam, J. (2022). Bangladesh capable of exporting electric vehicles. Daily Sun. Web.
Janis, M. (2022). This country is investing in electric vehicle manufacturers. Its time for manufacturers to invest in this country And in our workers. Forbes. Web.
Keeton-Olsen, D. (2017). Why Southeast Asias rising minimum wages could push workers out of factories, in a good way. Forbes. Web.
Partner, B. (2022). Unlocking Africas automotive aftermarket. Forbes Africa. Web.
Volkswagen Group | Company Overview & News. (2022). Forbes. Web.
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